11 November 2018 Business

K&B hit by bottlenecks in supply as demand for Q4 installations soars

K&B customers want end of year installations to minimise disruption on their business, but this is affecting the flow of presses through factories.

Koenig & Bauer is anticipating what CFOMathias Dähn is calling "a surge” in revenues in the final three months of the year, the result of installations being delayed until the end of the year.

This is also causing the manufacturer some problems in terms of parts supply as well as the logistics of managing the deliveries and installation. It is an issue that is hitting sheetfed press in particular. The company explains that up to €35 million of orders may tip into the 2019 financial year because of delays.

Sheetfed continues to be the largest sector with orders for larger format carton presses especially pleasing for CEO Claus Bolza-Schünemann. “The situation with respect to parts and the high order backlog dampen our new business due to longer delivery times. We are currently working intensely on optimising our entire supply chain to achieve a sustained reduction in delivery times,” he says.

Revenue from sheetfed is down to €429 million (€474.7 million) with new orders down at €453.8 million (€480.3 million). The order backlog increased to €258.2 million (€243.1 million) ensuring a strong capacity for the factory well into next year.

There is an even larger increase in orders for the special products division, this including security and currency presses. However, there was only a marginal increase in orders in the digital web division. An increase in orders for flexo presses being offset by decline in orders for newspaper and digital presses.

There are also expenses related to entering the corrugated markets where initial installations are planned for next year. This along with die cutting and two-piece cans is pitched at a market reckoned to be worth €2 billion a year, growing at between 2-10%. K&B wants to boost current sales by €200 million by 2023 as a result.

For the first nine months of 2018, revenue is €788.8 million, down from €847.7 million this mark last year. This is the result of the delays announced above. Incoming orders are up 4.4% at €943.2 million (€903.4 million). Its share price has suffered, dropping 17.2% from teh start of the year by the end of the third quarter.

Pretax profit fell from €35 million to €25.4 million with an Edit margin of 6.6%, this despite the lower revenue in Q3. The company remains confident of achieving a 7% margin for the year. And to be able to edge this to double figures in the next five years.

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Sheetfed continues to be the largest sector for K&B, with orders for larger format carton presses particularly strong. The order backlog has increased to €258.2 million (€243.1 million) ensuring a strong capacity for the factory well into 2019.